City’s New Ferry Ordinance Gives Boats More Freedom

By Matt Mikus

The Mackinac Island City Council adopted a new ferry franchise ordinance Wednesday, June 20, cutting short a two-year franchise adopted the city in 2010. New franchise agreements with three ferry boat companies are to be approved by the council at its next regular meeting Wednesday, June 27. The agreement removes the 7% franchise fee based on gross passenger receipts, and replacing it with a flat rate of $600,000, divided evenly between each of the ferry franchisees.

The new flat rate would be about 4.7% of gross receipts, based on last year’s collection by the city.

The new ordinance will take effect Sunday, July 10. Approved by a four-to-one vote, Councilman Sam Barnwell voted against the ordinance and Councilman Dan Wightman was absent.

Originally scheduled for approval Wednesday, June 13, the city council tabled the matter when Shepler’s Mackinac Island Ferry asked for more time to review the ordinances and discuss any potential changes. The council decided to reschedule for Monday, June 18, in the morning, but later changed it to Wednesday, June 20.

Three boat lines will file for ferry franchises. Arnold Line and Star Line will end their Northern Ferry Company arrangement. All seasonal or resident passes purchased during the agreement will continue to be honored, but day tickets will cease to be interchangeable starting July 10.

The new ordinance organizes ferry services under two seasons. Regular service will be between

April 21 and October 31, and winter service will be between November 1 and April 20, ice permitting.

One ferry company will provide exclusive winter services, and will receive a $100,000 subsidy to help offset costs for running in the winter. Arnold Line agreed to provide the service this fall. The city will seek proposals from all the ferry companies for a five year contract after this year. Should no boat company submit a proposal, the city can alter the franchises to insure winter service, if necessary.

All companies granted a franchise must provide service during the regular season. All companies will pay the city a combined total of $600,000, adjusted for inflation, divided equally among the number of companies. The amounts already paid under the old 7% franchise this year will be credited toward the $200,000 each company will pay for 2012. The ordinance allows two options for the companies to pay, either in monthly installments or in accumulated amounts during the regular season. The second option allows the ferry companies to pay during months that they receive their highest revenues. Councilwoman Anneke Myers asked that the ferry companies inform the city which option they will choose for budgeting finances. No one objected to her request.

All licensed franchisees are allowed to provide freight services year-around.

The companies are prohibited from discriminating in rates, classifications, regulations, or services, or subject any person to a disadvantage. This does not prevent boat lines from setting a graded scale for passengers to receive discounted rates.

Schedules for departures must be submitted to the city, but companies can change the schedule at any time without requiring approval by the city council.

“What is written now in the ordinance,” said city attorney Mike Cavanaugh, “is what we suggest the council adopt.”

Two state senate bills, SB 1150 and 1151, spurred the changes to the ordinance, and a group, headed by Dan Musser III and Dennis Cawthorne, established a memorandum of understanding toward a compromise between the ferry companies and the city.

One member of the public, Francis Straus, noted that the new fee isn’t tied to the number of visitors brought to the Island.

“If the boat lines carry over more passengers, they’re still paying the same fee,” Mr. Straus said. “But it’s more costs to the Island, because those passengers are going to leave trash on the Island, and cost more for a better police department and fire department for those people.”

Councilman Jason St. Onge said the same logic would have to apply if the boat lines carried fewer passengers, but the city would be unlikely to return any of the fee in that case.

After the meeting, both Mayor Margaret Doud and Shepler’s owner Chris Shepler were happy to see a resolution to the two-year ferry franchise fight.

“The past is there, and we’re going to leave it there,” Mr. Shepler said, “We’re just going to work harder at being better stewards to Mackinac Island, its residents, and that relationship.”

“I’m glad the city and boat lines could reach an agreeable solution,” Mayor Doud said, “We’re looking forward to working with the boat lines as we move forward.”